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June 11, 2013 – The CFPB released a white paper today on financial institutions' overdraft practices and policies and their impact on consumers – one of two reports expected from data collected in follow-up to the bureau's February 2012 request for information on this service.

NAFCU's regulatory affairs staff are reviewing the report for any impact on credit unions.

CFPB Director Richard Cordray phoned NAFCU President and CEO Fred Becker about the report in advance of a CFPB call with industry trades Monday previewing some of the findings. The report looks at market and contextual factors in the offering of overdraft services since the 2010 implementation of a consumer opt-in requirement under Regulation E. CFPB staff said the data show a significant impact on consumers of the change in policy and on those who decided to opt into the service.

Monday's call with trades was led by Dan Smith, assistant director of the bureau's new Office of Financial Institutions and Business Liaison. Cory Stone, CFPB's assistant director of deposits, cash, collections and reporting markets, presented some of the report's key findings:

• Involuntary account closure rates since the rule change have averaged 6% for consumers opting out of overdraft.
• A consumer who has one or more NSFs in a year had an average of $225 in annual fees.
• One-fourth of consumers had experienced an overdraft or NSF; of those consumers, one-fourth are heavy overdrafters, generating multiple overdrafts in a year.
• Since the 2010 rule change, 16 percent of consumers offered an opt-in have accepted. Of consumers opening accounts in 2011, 22 percent opted in to overdraft.

The CFPB plans to release another report later that drills down to transaction-level data.